Snowflake delivered a strong fiscal second-quarter performance, surpassing analyst projections across key metrics. The cloud data platform reported revenue of $1.55 billion, a 35% year-over-year increase that beat the Street's $1.48 billion estimate. Adjusted earnings per share came in at 62 cents, well above the 45-cent consensus forecast. Snowflake, which operates a consumption-based pricing model across its cloud data platform, competes in a crowded market that includes Databricks as well as offerings from the major hyperscalers such as Amazon Web Services, Microsoft Azure, and Google Cloud, making sustained product revenue growth a closely watched gauge of its competitive position.

The results were announced Wednesday after market close, and SNOW shares rocketed 22% in extended trading. By Thursday's pre-market session, the stock had climbed 23.27% to $376 per share. If sustained, the move would mark the fourth-largest single-session gain since the company's 2020 initial public offering.

Product revenue generated $1.49 billion in the quarter, up 37% from the prior-year period. Product revenue is the metric Snowflake itself emphasizes as its core top-line measure, since it reflects platform usage rather than professional services. Snowflake's net loss narrowed to $191.7 million, or 55 cents per diluted share, compared with a $297.9 million deficit in the year-ago quarter.

For the third quarter, Snowflake guided product revenue of $1.59 billion, ahead of the analyst consensus of $1.50 billion. Executives also raised the full fiscal-year product revenue outlook to $6.07 billion from the previous $5.84 billion target issued in May, and lifted the adjusted operating margin projection to 14.5% from the 13.5% guidance given three months earlier. Raising both the revenue and margin outlooks simultaneously signals management's confidence that growth and profitability can advance together, a combination software investors have increasingly demanded from cloud companies as interest rates rose.

CoCo AI Assistant Gains Traction

A key highlight of the earnings call was CoCo, Snowflake's artificial intelligence coding assistant. The platform now serves 9,100 accounts, adding more than 2,000 accounts during the quarter. Company leadership emphasized CoCo as a critical catalyst for revenue expansion and deeper enterprise adoption. The adoption figures arrive as enterprises across industries are racing to embed AI tooling into their data workflows, and Snowflake's ability to monetize AI features is viewed as a key test of whether data platforms can translate the AI boom into revenue.

CNBC's Jim Cramer featured Snowflake on his Mad Money program, declaring the stock positioned for a substantial upward move. He noted that Snowflake offers businesses an efficient way to purchase on-demand computing resources. Cramer's CNBC Investing Club holds a position in Broadcom, though he expressed greater caution on that holding after its Q4 outlook fell marginally short of forecasts.

Burry Raises Valuation Concerns

Not all investors share the enthusiasm. Michael Burry, the hedge fund manager known for predicting the 2008 financial crisis depicted in "The Big Short," described Snowflake as "very overvalued" in a recent Substack commentary. He cautioned that the company faces an "existential threat" should data lakes prove increasingly susceptible to cyberattacks as artificial general intelligence and quantum computing advance.

Burry also suggested that if corporations choose to internalize AI development and keep data on proprietary infrastructure, demand for third-party platforms like Snowflake could diminish. That concern echoes a broader industry debate over whether enterprises will build AI capabilities on their own infrastructure or rely on external platforms, a decision that could shape spending patterns across the cloud software sector.

Despite Burry's skepticism, Wall Street analysts remain overwhelmingly bullish. SNOW holds a Strong Buy consensus rating, based on 23 Buy recommendations and three Hold ratings. The average analyst price target stands at $368.68, implying roughly 20.6% upside from pre-earnings trading levels. With the stock now trading above that average target following the post-earnings surge, analysts' post-earnings target revisions will be a metric to watch in coming days.

Ahead of Wednesday's close, SNOW had already climbed 39% year-to-date, significantly outperforming the S&P 500's gain of roughly 12% over the same period.

Source: Blockonomi